Modern life encourages you to strive for your own business. But working alone is not as profitable and promising as working together. Therefore, like-minded people unite in organizations for joint business. Moreover, for mutually beneficial work not only individual businessmen unite, but also entire business entities.
A commercial organization is a legal entity with characteristic features whose main purpose is to make a profit. The main attribute of such an organization is precisely the purpose of the work - to make a profit. Although there are other signs inherent in different forms of commercial structures, which will be discussed in detail in this article.
Common features of commercial organizations
All private firms, regardless of form, have common features:
- receipt of benefits, that is, income that exceeds expenses;
- the general system of creation in accordance with applicable laws, since a commercial organization is a legal entity with all the ensuing rules;
- profit is always divided between those who own the organization;
- the presence of common property, which the company is liable for its obligations under the law;
- the opportunity on their own behalf to exercise their rights, obligations, represent interests in the judiciary;
- financial independence.
Forms of commercial organizations
From what tasks the ideological inspirer of creating a private company sets itself, the form of further organization is also chosen. Features of economic development and the formation of civic consciousness contributed to the emergence of many different forms of commercial organizations. They are grouped into appropriate groups according to certain criteria. And these groups, in turn, are also divided into subgroups.
Probably, many of us very often came across such definitions as LLC, OJSC, JSC, etc., as well as partnerships, production cooperatives, farms, unitary enterprises, and so on. Each group has a specific set of rights, obligations and directly depends on industry affiliation.
Rights are inseparable
So, a commercial organization is a structure uniting both individuals (founders) and business entities. By organizational and legal grounds, all commercial firms can be divided into two large groups:
- unitary enterprises (municipal or state subordination);
- corporations.
The first group is less common. It should be noted that the rights of commercial organizations of this type are very limited. This legal entity cannot dispose of property transferred to it from the owners. And owners, in turn, do not have corporate authority to intervene in the management of the structure. Such concepts as shares, shares, deposits, in this case are not applicable at all. That is, an appointed director or general manager manages the company using other people's property. And the owners themselves can count on a certain profit. But they do not make any production decisions and in no way can affect the performance of a unitary enterprise.
The second option is more common. It is characterized by the presence of founders with a corporate right to engage in the management of the company.
Corporations in different forms
So, corporations assume such management of a commercial organization, when the founders are endowed with broad rights and even are members of the supreme management bodies of the enterprise. Corporations are divided into three main structures:
- business companies and partnerships;
- cooperatives (exclusively production and none other);
- farms (they are also called peasant farms).
Business companies can also be completely different. Although they have one common attribute - they unite the capitals of several individuals who are jointly responsible for the work of the company. Previously, there were many varieties of business companies. But lawmakers decided to combine them into three general forms. Today it is an LLC (limited liability company), JSC (joint-stock company) and a company with additional responsibility.
What is the difference between LLC and AO
When a commercial organization is an LLC, then everyone who enters there as owners has a share of the authorized capital formed from the contributions of the founders. All limited liability companies have common features:
- The size of the authorized capital starts from 10 thousand rubles;
- the responsibility of each founder is proportional to the size of his contribution to the main charter;
- the composition of participants cannot be more than 50;
- The rights and obligations of participants are prescribed in the corporate agreement and in the charter.
And when the authorized capital is divided into shares, participants are liable for losses only in the amount of their shares, then such members of the enterprise can be any number. And they are called shareholders. This is the main difference between joint-stock companies (joint-stock companies). Such a commercial structure is public or non-public. That is, shares are placed using an open or closed method. A form of management is a meeting of shareholders. It is mandatory to create a board of directors consisting of at least 5 shareholders. It is not necessary to create such a structure in an LLC, and there is no strict rule on the number of participants in the structure.
Economic partnership and production cooperatives
A commercial organization is a structure, as we have said, uniting like-minded people with the common goal of making a profit. If we are talking about a business partnership, then two forms of such a structure are allowed - full partnership and limited partnership. The second formation is distinguished only by the fact that some members of the organization - individuals, do not have the right to participate in the management of the organization, but are only investors. They simply profit from the contribution for replenishing the stock capital with their own funds.
Production cooperatives are not popular. With this type of commercial association, all participants are obliged to manage, and in a composition exceeding five members of the organization. They are personally liable with their own property and for the debts of their company.
Agricultural Business
The name speaks for itself that the field of activity of such an organization as peasant farming is the rural industry. Create a farm enterprise can be as one owner alone, and unite with others.
Moreover, he cannot afford to join a number of such associations. Characteristic features of this form of commercial structure:
- all participants must directly participate in the affairs of the company;
- Farmers can be directly members of this structure;
- there are other duties of each farmer, prescribed and enshrined in the charter;
- the company acquires its material assets, equipment and supplies for the joint money of each member of the economy.
State commercial organization
The state also has the right to do business, benefiting from its work. This is a unitary enterprise.This type of commercial organization is a structure very limited in its rights to property. Because he does not own his own equipment and premises, but only uses all this for work. A unitary enterprise admits both municipal and state subordination, but has common features. We list them:
- has a certain legal capacity;
- uses someone else's property only as a tenant;
- participates in civil circulation.
At the head of a unitary enterprise is a director or general director. It is he who is responsible for all decisions as the sole leader. Collective leadership does not exist with this form.
Commercial "daughters"
There are also commercial legal organizations such as subsidiaries. The subsidiary company is not liable for the debts of the main company, but bears jointly and severally liable for all the transactions that it is entrusted with. And the dominant enterprise is vested with the right to assign tasks to the “daughters”, drawing up tasks for the future and current plans. The relationship between this dominant structure and subsidiaries is reflected in the relevant documents, which spell out the rights and obligations of the parties. There is also such a thing as a dependent business society. It depends on another organization with:
- no less than 20 percent of voting shares;
- 20% of the authorized capital of a limited liability company.
And if the company acquired 20 percent of the voting shares or began to possess 20% of the authorized capital, according to the law, it should publish this information.
And which is better - IP or LLC?
For those who want to create their own business, many books have been written, lectures and seminars are held. But a frequent question has been and remains: what exactly to open - IP (individual entrepreneurship) or LLC? It is no coincidence that some dwell on the first option. Because the opening of IP does not require much time and large financial investments. Moreover, for beginners, it is important that fines and taxes are low. Because no one is safe from mistakes and low profitability. And reporting from IP is much simpler. In addition, managing your own money is easy and pleasant. There are also disadvantages, among which:
- the risk of losing ownership of the IP due to unfulfilled obligations;
- IP activities are limited;
- it is necessary to pay interest to the Pension Fund.
The LLC has other pros and cons. Among the advantages is the lack of risk of losing money and property if you are just one of the founders, because the organization itself, and not the individual, is responsible for the debts. Another plus - the possibilities of such a solid organization are much wider. LLC can even be sold as unnecessary. And LLC does not pay contributions to the Pension Fund if for some reason it suspends activity. A cons:
- a more complex and lengthy registration procedure;
- stringent requirements for authorized capital;
- special rules for the withdrawal of earned funds;
- complex financial statements;
- high fines.
What is the form, such are the finances
Each commercial company creates a set of financial relations that allow solving social and production issues through the use of own funds. The finances of commercial organizations depend on their legal form. For example, the state form is more dependent on an infusion of budget funds. Many unitary enterprises receive state subsidies, thus minimizing the risk of bankruptcy. Whereas organizations of a non-state form of ownership rely more on their own strengths.
Their budget is formed, as a rule, thanks to the investments of the founders. However, commercial and non-profit organizations can count on budget injections.Although now it’s such a time that state-owned unitary enterprises rely more and more on other sources of financing, as budget injections are reduced. Thus, the state encourages enterprises to think more about the effective use of their own capabilities, the search for new sources of income, and cost reduction. Such sources may include interest and dividends on securities, income from operations with foreign currency and currency values, expanding the scope of services, and introducing competitive ideas.
Financial features by industry
The financial situation of firms is largely affected by industry affiliation. For example, financial commercial organizations as industries with great financial risk are required to have an adequate financial foundation, additional cash reserves, and insurance. We are talking about credit organizations, insurance companies. Commercial firms with low profitability are agricultural and, oddly enough, utilities and resource-supplying enterprises. Therefore, the law limits the ability of these firms to replenish sources of financing through the issuance of securities. Higher rates for social insurance against industrial accidents and occupational diseases require lawmakers from those industries in which there is an increased risk of getting professional “sores” and injuries - coal mining, gas, chemical and oil industries. Even the scale of the commercial firm itself is influenced by industry factors.
When organizing commercial activities, it is imperative to take into account that large-scale enterprises have mechanical engineering, shipbuilding and ship repair, metallurgical plants, in a word, almost all heavy industry. And trade and consumer services are realized through small and medium-sized businesses, often without requiring large scales. That is, depending on the specific industry, requirements are formed to the legal form of the commercial structure and, accordingly, to its financial mechanism.
Any forms, but one essence
Thus, the organizational forms of commercial organizations are very diverse. And this is good. Depending on the goals and objectives, on the field of activity and creative ideas, you can choose the most suitable option. And successful activity will depend on the right choice. However, success consists of many factors, but that's another story.